Month: February 2011

Many of you may be familiar with threatened closures of state parks in many states in the country. Due to budget issues, state parks budgets have been slashed for years, and in many cases state parks are litterally falling apart due to deferred maintenance. Now, faced with further budget cuts, states are in the process of closing many state parks. Arizona has already announced a closure list, and California is expected to release a closure list this week. States including Washington, Texas, Florida, New York, and New Jersey are all actively discussing park closures.

Far larger than any state parks agency, in fact the largest public recreation agency in world (by total number of sites) is the US Forest Service, which operates campgrounds, picnic areas, hiking trails and boat launches in nearly every nook and cranny of the country. Yesterday, in President Obama’s new budget, the President proposed drastically slashing the US Forest Service (USFS) recreation budget. This is no surprise, as the USFS has had its recreation budget eroded for decades.

But despite these cuts, most USFS recreation sites will remain open. There is no talk, as in the states, of wholesale closures. There is, in most USFS recreation sites, no growing accumulation of deferred maintenance. In fact, even if Congress and the President shut down the government (as happened under Bill Clinton and may happen this year), many USFS recreation sites, unlike nearly every other Federal facility, will remain open.

Why? Because decades ago, the USFS was forced to find and adopt a new model for managing its recreation sites, a model that could easily keep most state parks open if states were willing to consider it. To understand this opportunity, we first need to look at the traditional model for running public parks.

Traditional Model

The traditional model for running public parks and recreation sites has two components:

Use of high cost government labor to run park operations. Beyond just being high cost (in absolute wages and benefits) this labor is generally not well-matched to the task. For example, state employees are hired for 12-month-a-year jobs, even when park visitation is highly seasonal. In addition, college environmental science and parks management grads are employed whose interests are not well-matched to mundane tasks that dominate park operations, such as cleaning bathrooms and picking up trash.

Providing free or very low cost access. Most state parks offer free or below-market public access fees for day use parks or campgrounds. While it makes sense for agencies to offer free options for the public in their portfolio of parks, offering subsidized pricing at every park creates a huge need for appropriated funds (particularly given their high operating costs). While this subsidized access seems to be a public benefit, it actually works against the public as general fund appropriations dry up and maintenance has to be deferred and parks have to be closed.

One step several states have taken is to abandon the second part of this model by charging market pricing, and even above-market pricing. Arizona State Parks generally charges market-level pricing for park entry, but as budgets got tighter they actually doubled entry fees to as much as $20 per car to park at certain popular parks. California has done the same thing, increasing the price of no-hookup camping as high as $30 a night, when pricing of similar campsites in, say, the USFS in California typically run no higher than $18-$20 a night. The reason for this is their very high cost operations model, and even these higher fees have not headed off park closures in these states.

A New Model

About 30 years ago, the USFS began experimenting with a new model for running its recreation sites. I can’t say that the USFS did this willingly, and even today there are many in the agency who long for the day when they can return to the traditional model. In fact, necessity, in the form of Congressional legislation combined with declining appropriated funds for recreation, really forced the change. Today, over half of USFS recreation facilities are run under this new model, and if weighted by visitation, the number surely would be over 90%.

The model includes these two key elements:

Use of low-cost private labor for operations. Thirty years ago the USFS began using private operators to run campgrounds and busy day use facilities under a concession arrangement, meaning the private operator collected all revenue and paid all expenses for the site, and paid the USFS a fee for the privilege of doing so. With the stroke of a pen, sites that required appropriated money to operate suddenly were money makers for the USFS. As a further refinement, Congress gave the USFS the authority (and the incentive) to apply the fees they earned from campground and park operators to maintenance and improvement projects in the recreation facilities themselves.

Charging market-based use fees. In this program, private operators charge market-based fees (which must be approved by the USFS) that fully cover their costs AND allow for a payment back to the USFS. Recreation sites in this program no longer require public appropriations at all — they are entirely self-sustaining. That is why many USFS recreation sites will remain open even if the government shuts down

As both the public agency and private operators have gained knowledge about the program, this model has continued to be improved. For example, early on the USFS merely offered the largest facilities to private managers. However, they soon learned that if they continued to do so, they might be worse off budget-wise because they would be left with many small, expensive facilities to manage themselves. As a result, the USFS has learned to offer private operators packages or bundles of recreation sites, that generally include all the sites in one geographic area, big and small.

It is important to understand that this is merely a lease arrangement — this is not a stealth way to dispose of public lands into private hands. These are highly structured arrangements that require the private operator to conform to numerous restrictions. In particular, the private operator may not change or add facilities, services, operating hours, or fees without the agency’s written permission. No one, in other words, is out there building a McDonald’s in front of Old Faithful under this arrangement (there are several other very predictable critiques of this model, which hare answered here).

One added benefit of this arrangement is that, though there are some bad private operators, in general facilities are actually run better under this model. One reason is that maintenance and operations are fully funded, so no skimping is required. Another reason is that since they are paid with park revenues (rather than some flat fee), private operators benefit from, and therefore have the incentive to encourage, higher visitation. Finally, the skills and preferences and background of most private workers are better matched to the routine operating tasks required. As a result, most privately operated public parks get good reviews for their quality. As just one example, this independent site ranks public campgrounds in Arizona — in this survey, three of the top five sites are run by a private concessionaire in the USFS program, while none are operated by our state parks agency.

The Future

As I mentioned earlier, there are many people both inside the USFS and in the general public that long to return the traditional model — Agency leaders would love to have the prestige that would come from larger headcounts and budgets; public employees unions would generally rather see parks closed than have further precedents for private management established; and certain recreation user groups would prefer that taxpaying non-users pay for their recreation.

But the bankruptcy of the traditional model is likely here to stay. Current budget problems in state parks is not simply a product of this recession — for example, here in Arizona, park maintenance was under-funded even in the good times. The reality of government is that non-discretionary expenditures (e.g. health care, entitlement, pensions) are growing far faster than the economy and are going to totally consume government budgets. Discretionary spending, particularly in the case of things like parks that can support themselves with fees, is going to continue to be crowded out.

If you are interested in this model, you can find out more at this site (just scan down the page). We are planning a national conference on private management of public parks as a way to keep parks open, and you can sign up for information on the conference here. And, as usual, you are always welcome to email me at the link on this site.

I am in the planning stages for a national conference on private operations of public parks and recreation. The date and time have yet to be set, but it will be targeted at legislators, administrators, parks directors, and private practitioners. If you would like to be on our mailing list to receive more information as the details are firmed up, please click the link below or in the sidebar on the right.

Efforts to bring private management to recreation in Arizona State Parks got a pretty nice write-up by Mark Duggan, which includes supportive comments from the model from Jay Zieman of Arizona State Parks. I have been talking to skeptical parties in and out of state parks about this idea for over a year. I think a big part of the breakthrough in understanding has been that private companies are not trying to take ownership of the land or even control how it is used — we are merely trying to run many of the mundane park operations.

In particular, I think this chart resonates with many of the folks I present it to who are concerned about privatization:

I make the case when presenting this chart that private companies are really only aspiring to perform the duties on the right, under strict supervision and controls. The state retains all the higher value-added duties on the left, as a minimum, and may under certain arrangements retain some roles on the right side. The opportunity for the public is that a huge percentage of the budget in state parks is spent on the right side, and private companies typically offer a minimum of 30% lower costs on these activities.

The following is a guest editorial, which has appeared in a number of California newspapers, from John Koeberer, head of the California Park Hospitality Association (of which I am also a board member).

The prospect of California State Park closures is again in the news as the State of California deals with its continuing budget crisis. There are, however, private alternatives that should be considered before closing the parks.

Increased public funding of the parks just isn’t an option. The failure of Proposition 21 last November made that clear. By soundly defeating the proposition, voters declared their opposition to increasing taxes to maintain state parks as they are today. Countless surveys and actual park use demonstrate that while Californians love their state parks, they also want them managed within available resources.

The State of California has exhausted the governmental solutions to the dilemma. And so, California State Parks have no alternatives other than to close parks or find non-governmental funding solutions to sustain them. In the past, privately funded solutions have been dismissed out of hand. Though today, no solution that would keep our state park system viable should be discarded. So, let’s consider these alternatives:

Close Some State Parks. As a park professional, it is difficult for me to even mouth the obvious, but some parks don’t belong in the state park system. Most of these are among the smallest of our parks and lack any semblance of statewide historical, natural, cultural, recreational or economic significance. They were often added in response to political influence, when funding was more available or when state government was on an acquisition spree. California needs an independent task force (similar to the Defense Base Closure & Realignment Commission) to assess which parks should be retained and which should be buttoned up and maintained until times are better. The task force might also recommend which parks are likely candidates for adoption by non-profits, local park districts or other sympathetic entities that are able to operate and maintain them. Potential savings from this assessment could be substantial.

Private Management. Many parks could be packaged on a regional basis for private-sector management, while others have sufficient real or potential revenues to be managed on their own. Private enterprise has shown it can accrue operating savings on an average of 30% better than government while managing park facilities comparably. Under this scenario, supervision and protection (public safety, natural resource protection, etc.) of the parks would remain under the direction of a California State Parks superintendent. Depending upon need and appropriateness, functions like maintenance, janitorial, fee collection, interpretation and limited and contracted security could be assumed by private contractors. These functions represent the lion’s share of the overall costs to keep parks open. There is significant precedent for this type of arrangement across the country. The savings (both human and financial) could be substantial and could support and manage more effectively parks still directly operated by the California State Parks.

Innovate Revenue-generating Solutions. Many innovative, privately-managed ways to raise funds are available to state parks, including: automated fee-collection at park entrances, parking lots and showers that could collect revenue 24/7 at a fraction of the cost of manned kiosks; more privately owned and managed tent cabins, park models, yurts, and other popular new forms of alternative camping that could generate added revenue for the parks; and special events (concerts, competitions and spectator events) that could generate substantial new receipts for parks. Programs and policies that encourage private investment could attract new types of tour, recreational and interpretive programs to parks while appealing to new audiences of park users. To its credit, California State Parks is now surveying tour companies to investigate more profitable ways to provide tours. A top-to-bottom review of outdated state park policies could result in substantial gains in fee collections, such as at Hearst Castle where significant revenue is lost because of current approaches. More revenue can be generated without additional investment by state government. In many cases, existing park concessionaires would be willing to expand their operations via amendments to their contracts, in ways that increase revenue to the state, sustain and improve upon the park experience, and preserve park values.

Challenge Concessionaires for Solutions. It is in the DNA of entrepreneurs to invent new ways to stimulate revenue. Do that by challenging state park concessionaires to propose revenue-producing ideas and programs appropriate to the parks. Private capital can be attracted for park improvements when equitable opportunities for a return on the investment are given. Many such investments in facilities and equipment could be left in state park ownership at the conclusion of the contracts with these private companies, allowing the state parks to attract even greater fee revenue upon the contracts’ rebid.

Employ a Management Consultant. Considering that the old approaches aren’t working, it’s time for a fresh start. Take this opportunity to reinvent how state parks are managed and operated. Major U.S. corporations and non-profit organizations often employ private management consultants to help them conceive new approaches. By doing so, they stay competitive, vital and relevant. Although private and public missions are different — innovative and effective management practices, policies and techniques are applicable to both worlds. There are very few governmental agencies that could not benefit from an external review and analysis.

All of the preceding private-sector approaches can be accomplished at little to no cost. They are not panaceas for the crisis facing our state parks but represent departures from past approaches. The many private park management companies now operating in public parks across the nation demonstrate that most criticisms of private solutions are unfounded. In the light of funding realities, past reluctance by the legislature and labor to involve the private sector must be overcome if California is to sustain its state park system.

The California State Park funding crisis has given our state the opportunity to redefine how our parks are managed in ways that will assure their quality, relevance and access for Californians now and into the future. If we can muster the political will to welcome new ideas from the private sector, while keeping park operations overseen by California State Parks professionals, then impending closures to and the rapid deterioration of the state park system does not need to be inevitable.